When the Rubber Hits the Road

September 27, 2022
12:45 pm

Definition: “Someone’s efforts, resolve, or viability are tested; things are meaningfully challenging.“
Wikipedia

The supply chain team’s past thirty-two months of disruption were a long, winding road full of surprises. Navigating through the turmoil is unprecedented: there are no easy reference models to guide behavior. As a result, companies are writing new case studies through their actions or inaction. Business continuity is the overarching issue.

Volatility and disruption are far from over. Based on the current issues with material shortages, labor issues, electrical costs and outages, weather events, and water availability, I forecast an equal level of disruption for the next three years. COVID impacts also continue.

Don’t Be Like Ford

Last week, after booking an additional $1B in unexpected supplier costs in the third quarter, the CFO led the company’s focus on restructuring to “support efficient and reliable sourcing of components and internal development of key technologies and capabilities.” Following the announcement, Ford’s stock closed at the lowest valuation in eleven years.

What is the issue? In this volatile world, efficient procurement led by a CFO is not the answer. The company needs to focus on the design of flows, building outside-in processes, creating an effective supplier development group, reducing complexity, and driving bi-directional orchestration to a balanced scorecard. Make, source, and deliver need to be managed together based on analytics that sense and respond at the speed of business. These capabilities do not exist at Ford. The manufacturing-centric company is used to strangling suppliers and demanding terms. Continuation of the traditional Ford culture will lead to even more significant issues.

Ford, historically has been an industry laggard in the automotive sector and, with this focus, will continue to be a laggard in the future. The low Return on Invested Capital (ROIC) and the growth below the industry average comes from the lack of network design and organizational alignment between new product development, manufacturing, and procurement. Ford is known for strong-arming suppliers and is less collaborative than its competitors like Subaru and Toyota.

Table 1. Results in the Automotive Industry for the period of 2012-2021

Characteristics of Who Is Navigating Well?

So, what can Ford and others learn from our current research? Four months ago, we used our Linkedin following of 329,000 readers to complete a research project to understand company performance during the pandemic. The goal is to help supply chain leaders to understand which techniques work and which do not. In Figure 1, we show the overall performance of manufacturers and distributors. Overall, 38% managed well or very well, while 62% struggled.

Figure 1. Performance of Manufacturers and Distributors During the Pandemic

So, you might ask, why? What drove the difference? We find that three factors mattered: organizational alignment, descriptive analytics, and inventory management.

Companies that performed better during the pandemic had better organizational alignment. There was a strong negative correlation (at an 80% confidence level) when companies were not aligned between customer service and transportation. (During the pandemic, transportation costs skyrocketed, creating increasing tension between customer service and price. Companies driven by functional metrics struggled: they could not adapt quickly to the higher transportation costs.)

Excel usage increased during the pandemic. Companies implementing Advanced Planning solutions from ERP technologists augmented the planning applications with descriptive analytics. (There was a negative correlation with companies adhering to tight SAP standardization.) Companies with more advanced modeling technologies and mature planners positively correlated at a 60% confidence level.

Multi-tier inventory management by itself was not sufficient. Companies actively designing their supply chains (focusing on form and inventory function) with a more mature S&OP process performed better. In Figure 2, we show the responses to the question of the greatest issue during the pandemic.

As we brace for the future of continued and unplanned disruption, the knee-jerk reaction is to tighten functional metrics. Executive understanding of the supply chain as a complex non-linear system is unfortunately low, and business leaders will struggle to prevent negative impacts. The answer lies with outside-in modeling using network design and digital twin technologies to show the negative impact to the executive team of the focus on functional metrics throwing the supply chain out of balance.

Unfortunately, there will be more Ford-like announcements as company, after company, realize the impact of disruption and variability. Brace yourself, I think that we are mid-way through this disruption cycle.

My advice? Align the organization against a common vision for supply chain excellence. Design network flows monthly to help leaders see trade-offs. (Where possible use market data to decrease market and demand latency.) Decrease the focus on functional metrics and align to a balanced scorecard.

The Myth of End-to-End Planning

July 31, 2026 9:14 pm

Supply chain planning, supply management, supply chain execution, network design, and transportation/logistics management operate in silos. Not much has changed over four decades. The connections flow back through transactional systems: order-to-cash and procure-to-pay. There is a myth that companies can buy an end-to-end supply chain management solution. This is largely a myth. Here we explain.

Lead Time: A Broken Gossamer

July 16, 2026 6:38 pm

If you are struggling with supply chain planning, dancing in the light of shiny objects, and scratching your head, please read on. My goal is to help you.

Please do not AI Stupid. What do I mean? AI Stupid is putting agents and agentics on top of existing architectures believing that making them faster and hands free add value. To me, this is fools play.

I love AI. I am excited about new technologies. To this end, I want to shine a light on how new technologies can help address the black holes and inconsistencies in today’s supply chain, which largely stem from the limitations of the first generation of supply chain planning and execution technologies. In this blog, I give you three places to start.

Do You Need a Supply Chain Coach?

July 9, 2026 5:27 pm

Supply chain is where the rubber hits the road. For a public company, over 40% of market capitalization is tied to the trade-offs between growth, operating margin, inventory management, and Return on Capital Employed.

The road for supply chain improvement is fraught with issues. Here we share some and offer some advice.

Is your Supply Chain AI Ready?

June 11, 2026 2:39 pm

A simple quiz to assess an organization’s AI readiness.

The pace of change is fast and furious. Every day, technology advances faster than we can digest. A great challenge to have.

Determining whether a supply chain is “AI-ready” is less about technology and more about the gray matter between the ears of supply chain leaders. Leadership, alignment, and clarity of goals matter.

Too few companies are clear on the definition of supply chain excellence. Measuring and rewarding functional metrics reduces the firm’s value. Putting agentics on top of today’s processes can make bad practices run faster, reducing value.

The toughest job for the supply chain leader is challenging existing supply chain paradigms that were defined by the limitations of decades of supply chain technologies. As the curtain lifts on the potential of new forms of technology, process redefinition is our opportunity, but only if we are clear on what drives value. (Here, I link to the Supply Chains to Admire reports to help you define value. The next report will be published on June 23rd, along with my Dynamic Benchmarking Product, to help you define value in the face of your AI readiness. More information about the launch is at the bottom of this blog.)

Case Study: A Scrappy Demand Management Approach

June 9, 2026 5:37 pm

This study of Franklin Sports shines a light on the work that needs to be done at the sales account level to challenge a retail forecast, and also highlights the importance of a new technique for a forecast engine — reinforcement learning.

Artificial intelligence comes in many forms — large language models, generative AI, machine learning, unstructured text mining, deep learning, neural networks, reinforcement learning, agents, and agentics. While the industry is wigging out about agentics, I think reinforcement learning is a great step forward in the journey of Artificial Intelligence.

Can We Side-Step the AI Spin Cycle?

June 7, 2026 3:44 pm

When it comes to combining tech, 1+1+1 should equal more than 1. The impact should be exponential. Unfortunately, today, the answer is 0.

What do I mean? Let me explain.

I find that the supply chain technology market moves slowly along traditional technology lines. Conferences are usually focused on the use of technology, not on redefining work. This bothers me. I want it to bother you as well.

Here I share some insights to drive change.

Supply Chain Shaman